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Discounted Cash Flows (DCF) Key Terms

Finding resources on terms and concepts for different discounted cash flow techniques online

By J. Stoltzfus, writer/programmer LOCAL CITIZEN
The phenomenon of discounted cash flow techniques as part of business valuation introduces a whole new way of running the corporate numbers. With lots of financial projections more or less dictated by known market values, new technology is helping business leaders re-think the values of their assets.

There are several different ways to go about using discounted cash flows valuation, and managers wanting to distinguish between these functions can get informed on key terminology, news, definitions and more with free online resources teaching the public about discounted cash flow models and techniques. Businesses can benefit from the educational resources in:

1. Learning about discounted cash flow in regards to tax valuation and how to incorporate annual events into the books for use with discounted cash flow tables or models.

2. Using discounted cash flow technique to see what the "real ROI" might be on a project when the books are closed months or years in the future.

3. Integrating discounted cash flows into the periodic financial analysis that goes on in board rooms and in offices.

 

Find resources on discounted cash flows "cash flows to equity" valuations

The cash flow to equity model is one way of using discounted cash flows to chart the future of a business. This approach tends to focus on issues of liquidity and is separate from other "entity-approach" models.
Try: Get free cash flow to equity models and other DCF business valuation online from Mr. Swing, a trading and valuation site with a lot of informative pages. The Social Science Research Network hosts pages on more about this kind of valuation.

Look for resources on weighted average cost of capital approach for discounted cash flows

The weighted average cost of capital approach essentially calculates how much a company must pay to maintain its assets. This can be a complex process for companies with multiple assets and a high degree of asset itemization.
Try: Get details on weighted average cost of capital approach at the website of Value Based Management. Find more on WACC and weighted returns services at Brand Finance.

Find info on adjusted present value (APV) and similar discounted cash flows techniques

Adjusted present value uses tax shields and other factors to calculate a Net Present Value (NPV). APV is another variable method of rating corporate assets and project values by balancing costs and projected revenues.
Try: Get info on APV and related terms at the Financial Library online. For more information on APV and similar kinds of discounted cash flow analysis, check out Trade Tax Free: "Where the Smart Money Goes."

 

  • When looking at the various discounted cash flow techniques available, try to keep in mind the specific ways that each approach will shed light on your own particular assets in terms of the time-line you want to illustrate. Learn about all of the business valuation models available and select the one that best fits your needs.

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